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Swellendam is controlled by a single-seat majority consisting of four DA councillors and the ACDP councillor and deputy mayor Julian Matthysen. The ANC also has four councillors.
On Monday, ANC provincial secretary Songezo Mjongile claimed the Swellendam council had not been functioning since February because it could not raise a quorum.
Mjongile said: "The financial controls of the council have collapsed and no reconciliation has been done since 2007."
He also alleged there was fraud and theft of about R1.1-million by cashiers. He added that the situation had resulted in the council being investigated by the Special Investigation Unit (Hawks).
Tania Colyn of the provincial department of local government confirmed that a quorum for decision making was frustrated on numerous occasions since last month.
"Four members of the ANC arrived for council meetings, took part in preliminary discussions, but left the meeting without the speaker's permission, rendering the meetings not quorate," she said. This brought about a situation where the two remaining parties had an equal number of seats and could be described as a hung municipality.
Due to a quorum not being attained at a number of consecutive meetings, critical matters such as the approval of the adjustment budget could not be finalised.
Colyn denied the council was not functioning and that they were not rendering services to people.
"The situation has now changed in that the ACDP member was reinstated to his position by way of a court order following a settlement between the member and ACDP.
Colyn said a quorum for decision making was now possible.
She claimed the financial reconciliations (based on several unreconciled items for the period from July 2007 to June 2011) was incorrect. The situation has since been corrected, she said.
Colyn also confirmed two cases of fraud were under investigation. "The fraud charges relate to building plan fees and monies unaccounted for by cashiers. The Hawks are also investigating two cases of alleged irregular expenditure in terms of supply chain management processes. This relates to the period 2008 and 2009."